What Recent Richmond and Bay Area Industrial Sales Reveal About Value Drivers
Recent industrial property sales in Richmond, Virginia, and the Bay Area offer a vivid illustration of how location continues to command value premiums in the sector—even as scale and facility quality compete for investor attention. On this week’s TreppWire Podcast, institutional buyers weighed pricing and tenant demand across two regions, exposing the dramatic gap in price per square foot and revealing the underlying narratives shaping closing strategies in today’s market.
Facility Attributes and Sale Data
The Richmond-area transaction saw LaSalle Investment Management acquire Axial Gateway 95, a 505,000-square-foot Class A facility for $70.5 million, or just under $140 per square foot. This build-to-suit deal, brokered by JLL and partially financed by Santander Bank, is located 18 miles south of downtown Richmond and is fully leased to Hill Phoenix, a refrigeration manufacturer for the food retail sector.
Opened in 2024 on a 57-acre site, the warehouse exemplifies modern bulk distribution standards for the mid-Atlantic. Still, it captures only a modest valuation—despite scale—compared to similar facilities in top-tier coastal markets..
Meanwhile, in Northern California’s Bay Area, Sagard Real Estate paid $62.75 million for a 261,000-square-foot warehouse, equating to more than $240 per square foot. The property, built in 1973 and renovated last year, offers proximity to 22 miles east of San Francisco, 28-foot clear heights, and recently secured Pacific Fusion—a clean energy startup—as its anchor tenant.
This sale, from a long-term nonprofit seller, demonstrates how location and functional upgrades can overcome vintage or scale constraints, creating a meaningfully higher premium.
Location Premiums and Value Drivers
Trepp analysts attribute the price-per-square-foot gap primarily to geographic context rather than intrinsic facility attributes or size.“Anything within driving distance of San Francisco, you’re going to see that premium across all property sectors, and we’re seeing it play out here with this industrial site.” Lonnie Hendry, Chief Product Officer at Trepp, said.
SVP Erin McKee echoed the fundamental reality: “With economy of scale in Richmond, you would expect a lower price per foot, but that alone doesn’t erase the effect of proximity for Bay Area buyers.” The Bay Area’s relentless demand, reduced vacancy, and tenant base for innovative sectors reinforce the premium, even for older, renovated assets.
Buyer Profiles and Tenant Narratives
In both cases, institutional capital drove the acquisitions—LaSalle in Richmond and Sagard in the Bay Area—yet the Richmond buyer opted for scale and stable occupancy, while the Bay Area investor prioritized location and tenant quality.
The fully leased Axial Gateway 95 points to regional distribution demand and a focus on operational certainty, with Hill Phoenix anchoring the facility and supporting its construction financing through predictable cash flows.
For Sagard Real Estate, the flexibility of the 1973-vintage property, upgraded with modern clear heights and dock capacity, allowed new tenant Pacific Fusion to expand its footprint for advanced manufacturing and energy applications.
The tenant narratives in each deal reinforce the strategic distinctions: In Richmond, “prime clean cash flow is still going to clear,” as Joe McBride, Head of CRE Finance, put it, noting that credit quality remains paramount for buyers outside obvious premium geographies. By contrast, in the Bay Area, rising fundamentals for innovative and logistics-focused tenants enable buyers to “pay up” for assets with strategic location, even when scale is sacrificed for proximity.
Market Differences and Takeaways
Industrial location premiums are not static; they intensify where demand for proximity and flexibility override scale economics. Richmond’s sale figures reflect typical regional discounting tied to absorption velocity and local tenant demand.
In contrast, the Bay Area’s pricing illustrates how geography compounds value, particularly when facility upgrades permit use by high-growth, resilient tenants. “Location is the variable buyers are willing to chase—sometimes at any cost—when the fundamentals justify the premium,” Hendry said.
Experienced investors know that the calculus of price per square foot is not only about building bulk, but also a reflection of strategic bets on geography and tenant performance. Recent sales in Richmond and the Bay Area, as dissected by Trepp’s podcast team, prove that location remains the dominant driver of industrial value, no matter how modern the facility or how robust the anchor tenant.
Source: GlobeSt/ALM